Tata Steel Q4 PAT seen down 75% at Rs 1,025 cr

Tata Steel, one of top 10 largest steel companies in world, is expected to report a consolidated profit after tax of Rs 1,025 crore for the fourth quarter of FY12, down 75% as compared to Rs 4,175 crore in a year ago period, according to CNBC-TV18 poll.  

Profit in Q4FY11 included gain of Rs 2,503 crore on sale of Teeside plant. In the December ended quarter of 2011, company reported net loss of Rs 602.7 crore.

Net sales are seen going up by 1% to Rs 33,673 crore from Rs 33,443 crore year-on-year.

EBITDA is likely to down by 20% to Rs 3,283.5 crore from Rs 4,085.9 crore during the same period.

EBITDA margin is expected be at 9.8% in the quarter ended March 2012 as against 12.2% in the corresponding quarter of last fiscal and 4.8% in the previous quarter.

On quarter-on-quarter basis, net sales are seen going up by 2.2% and EBITDA is likely to be doubled.

What to expect this time?

Consolidated sales volumes are expected to increase to around 6.05 MT versus 5.84 mt (q-o-q)

Tata Steel India (TSI):

- Revenues to increase on a QoQ basis on account of higher steel volumes

- Also flat product prices were up 2% QoQ, while long product steel prices were up 6% QoQ

- Sales Volume: Came in higher at 1.768 mt, up 3.3% on YoY basis and roughly 8% QoQ which is good in the challenging environment

- EBITDA/tonne: Decline to sub USD 300/tonne from USD 303/tonne it achieved in Q3FY12 due to a higher proportion of externally-purchased coking coal in the mix and year-end provisions

- EBITDA/tn will face pressure led by forex impact of around Rs 1 billion on coking coal, higher wage provision ((INR 1.25-1.5bn)) and decline in ferro business profitability

- Key Positive To Watch: 2.9 mtpa brownfield expansion in Jamshedpur is expected to be commissioned in Q4 FY’12

- Going ahead expect gradual production ramp up at the 3mtpa brown-field expansion with 1mtpa of incremental sales in FY13

TSE (Tata Steel Europe) and International operations:

- European operations are expected to witness a marginal improvement in respect of sequential performance from a seasonally weak quarter

- International operations volumes likely to come in the range of 4.4mt

- Average steel prices increased 4% QoQ in 4QFY12 in Europe

- Expect Tata Steel Europe to report sales volume of around 3.5 MT

- Expect Tata Steel Europe (TSE) should become EBITDA positive due to higher realizations and easing of raw material cost pressure

- In Q3FY12 it had reported a negative EBITDA/t due to inventory write-down of Rs740cr

Debt will continue to remain a overhang:

- Net debt at the end of December 2011 was Rs 50,528 crore (USD 9.52 billion) versus Rs 46,627 crore (USD 8.79 billion) at the end of March 2011 (Much of it from its USD 13 billion acquisition of Anglo-Dutch steelmaker Corus in 2007)